RSM TOP-AUDIT
Pokrovka str. 43, bldg.1, Moscow,
103062, Russia
Telephone: +7(095) 916-0911 Fax: +7(095) 917-8789
+7(095) 917-8789
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
North-West Oil Group Inc.
We have audited the accompanying interim consolidated balance sheet of
North-West Oil Group Inc. (the "Company") as of March 31, 2006 and the related
interim consolidated statements of earnings and comprehensive income,
stockholders' equity and cash flows for the period April 1, 2005 to March 31,
2006 and from July 1, 2004 to March 31, 2005 . These interim consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these interim consolidated financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, these interim consolidated financial statements referred to
above present fairly, in all material respects the financial position of the
Company as at March 31, 2006 and the results of its operations and cash flows
for the period ended April 1, 2005 to March 31, 2006 and from July 1, 2004 to
March 31, 2005 in conformity with accounting principles generally accepted in
the United States of America.
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RSM TOP-AUDIT
NORTH - WEST OIL GROUP INC.
CONSOLIDATED INTERIM BALANCE SHEET
(AUDITED)
APRIL 01, 2005 JULY 01, 2004
MARCH 31, 2006 MARCH 31, 2005
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U.S. $ U.S.$
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ASSETS
CURRENT ASSETS
Cash and Equivalents 3 092 48 723
Accounts Receivables 713 663 196 081
Financial Assets 765 361
Inventory 758 204 168 844
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Other 434 296 20 542
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Total Current Assets 2 674,616 434 190
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Fixed Assets 99 679 186 470 413
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Total Assets 102 353 802 904 603
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable 1 021,767 486 906
Other Current Liabilities 96 725 14 487
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Total Current Liabilities 1 118,492 501 393
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Long Term Debt 12 235 595 -
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Total Liabilities 13 354 087 501 393
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STOCKHOLDERS' EQUITY:
Capital Stock 347 347
Paid in Capital 79 352 969 -
Retained Earnings 9 646 399 402 863
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Total Stockholders Equity 88 999 715 403 210
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Total Liabilities and Stockholders' Equity 102 353 802 904 603
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NORTH - WEST OIL GROUP INC.
CONSOLIDATED INTERIM STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(AUDITED)
FOR THE PERIOD FOR THE PERIOD
APRIL 01, 2005 JULY 01, 2004
MARCH 31, 2006 MARCH 31, 2005
-------------- --------------
U.S.$ U.S.$
Sales:
Income 103,996,305 1 311 006
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Operating Expenses 83,822,737 1 074 837
Selling, general and administrative 6,406,171 30 305
Amortization/Depreciation 1 031 828 47 041
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91,260,736 1 152 183
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Earnings before Provision for Income Taxes 12,735,569 158 823
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Total other Income Net 20,799 6 350
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Earnings before Tax Provision 12,714,770 165 173
Provision for Income Tax Expense 3,051,544 38 260
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Net Income for the Period 9,663,226 126 913
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Net Earnings for Common Share
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Fully Diluted
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Weighted Average Common Shares
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Fully Weighted Average Common
Shares Outstanding
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NORTH - WEST OIL GROUP INC.
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(AUDITED)
FOR THE PERIOD FOR THE PERIOD
APRIL 01, 2005 JULY 01, 2005
MARCH 31, 2006 MARCH 31, 2005
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U.S.$ U.S.$
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings 9,663,226 126 913
Depreciation and amortization 1 031 828 47 041
(Increase) decrease in: - -
Changes in Receivables (517 582) (196 081)
Changes in Liabilities 716 666 501 609
Changes in other Operating
Activities (1 003 114) 189 386
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Net cash and cash equivalents provided by
OPERATING ACTIVITIES 9,891,024 668 868
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Capital Assets (111,171 618) (517 454)
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NET CASH USED FOR INVESTING ACTIVITIES (111,171,618) (620 145)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Paid in Capital 88 999 369 -
Long-term loan 12 235 595 -
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Net cash from Financing Activities 101 234 963 -
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Net (Decrease) Increase in Cash (45 631) 48 723
Cash- Beginning of Period 48 723 -
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Cash - End of Period 3 092 48 723
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SUPPLEMENTAL DISCLOSURE OF NON-CASH
FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
INTEREST - -
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INCOME TAXES - -
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NORTH - WEST OIL GROUP INC.
NOTES FOR INTERIM CONSOLIDATED STATEMENTS
AS AT MARCH 31, 2006
(AUDITED)
1. ACCOUNTING POLICIES
a) Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries.
c) Cash and Cash Equivalent
The Company considers highly liquid investments with maturities of
three months or less at the time of purchase to be cash equivalents.
d) Fixed Assets
Furniture, fixtures and equipment are recorded at cost less
accumulated depreciations which is provided on the straight-line
basis over the estimated useful lives of the assets which range
between three and seven years. Expenditures for maintenance and
repairs are expensed as incurred.
Income Taxes
The Company accounts for income taxes in accordance with the
"liability method" of accounting for income taxes. Accordingly,
deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets
and liabilities, using the enacted tax rates in effect for the year
in which the differences are expected to reverse. Current income
taxes are based on the respective periods' taxable income for
federal, state and foreign income tax reporting purposes. As at
March 31, 2006 these amounts were $3,051,544.
f) Earnings Per Share
Earnings per common share is computed pursuant to SFAS No. 128
"Earnings Per Share". Basic earnings per share is computed as net
income (loss) available to common shareholders divided by the
weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that
could occur from common shares issuable through stock options,
warrants and convertible preferred stock.
g) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
NORTH - WEST OIL GROUP INC.
NOTES FOR INTERIM CONSOLIDATED STATEMENTS
AS AT MARCH 31, 2006
(AUDITED)
h) Fair Value Disclosure at March 31, 2006
The carrying value of accounts receivable, inventory and accounts
payable are a reasonable estimate of their fair value.
i) Effect of New Accounting Standards
The Company does not believe that any recently issued accounting
standards, not yet adopted by the Company, will have a material
impact on its financial position and results of operations when
adopted.
During June 2001, SFAS No. 141, "Business Combinations" was issued.
This standard addresses financial accounting and reporting for
business combinations. All business combinations within the scope of
SFAS 141 are to be accounted for using one method -the purchase
method. Use of the pooling-of-interests methods is prohibited. The
provisions of SFAS141 apply to all business combinations initiated
after March 31, 2006.
During June 2001, SFAS No. 142, "Goodwill" and Other Intangible
Assets" was issued. This standard addresses how intangible assets
that are acquired individually or with a group of other assets (but
not those acquired in a business combination) should be
i) Effect of New Accounting Standards - Cont'd
accounted for in financial statements upon their acquisition. SFAS
142 also addresses how goodwill and other intangible assets should
be accounted for after they have been initially recognized in the
financial statements. The provision of SFAS 142 is effective for
fiscal years beginning after December 15, 2001.
2. PROVISION FOR INCOME TAX
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently
due plus deferred taxes related to differences between the financial
statement and income tax bases of assets and liabilities for
financial statement and income tax reporting purposes. Deferred tax
assets and liabilities represent the future tax return consequences
of these temporary differences, which will either be taxable or
deductible in the year when the assets or liabilities are recovered
or settled.